The University of Michigan and Thomson Reuters said that consumer confidence rebounded in December, erasing the decline seen during the government shutdown. The preliminary Consumer Sentiment Survey data suggest that the main index improved from 73.2 in October to 75.1 in November to 82.5 in December. This brought the index essentially back to where it was in August (82.1). An increase was expected to occur as we moved further away from the budget impasse; although, the jump in December was well above the consensus estimate.
Americans perceptions about the economy rose for both the current environment and future expectations. The index for the present economic climate increased from 88.0 in November to 97.9 in December, its highest level since July. At the same time, the forward-looking measure advanced from 66.8 to 72.7.
Even with the better data, overall consumer confidence remains lower than it was in July (85.1), which was a six-year high, and the data suggest at least some degree of cautiousness about the future. The expectations component, for instance, stood at 77.8 six months ago in June. This indicates that there are some persistent anxieties.
While the economy has begun to see some improvements in the third quarter, one should not forget that the pace of the recovery has been quite slow and that labor and income markets still have a number of challenges. Beyond that, the fiscal issues that led to the government shutdown were only dealt with temporarily, with new deadlines approaching at the beginning of the year.
A final reading on consumer confidence from the University of Michigan and Thomson Reuters for December will be released on Monday, December 23. Then, we will get a competing read on consumer sentiment from the Conference Board for the month on Tuesday, December 31.
Chad Moutray is the chief economist, National Association of Manufacturers.